SaaS Updates in an Enterprise Environment

Back in December I wrote a post wondering whether the automated software updates widely pitched as a benefit by software-as-a-service providers were always a good thing. While a Google Apps product manager promoted frequent incremental updates to Apps as a positive, Burton Group analyst Guy Creese told me he wasn't so sure since companies like to know which new features are in the pipeline so they can tweak their processes to take advantage of them.

A reader named Ivan Erdos commented on my post, noting that while companies should welcome frequent -- and especially free -- updates, they should also expect to receive some advance notice of the updates. Such communication is especially important If an enterprise uses SaaS for business applications subject to compliance requirements.

This came to mind when I read an eBizQ post in which Phil Wainewright comes out in support of SaaS updates. He notes the lengthy lag time between when on-premise software vendors start promoting new features and when they become widely available and bemoans all of the marketing hype needed to sell folks on such features. He writes:

... The business model of on-premise software vendors is built around denying functionality to users until they can no longer resist paying for an upgrade. The success of this business model depends on spending large amounts on marketing so that users become aware of what they're missing. And of course it forces vendors to stuff the upgrade full of desirable new functions so that users can justify the cost and hassle of making the upgrade.

These are great points. And maybe Google is getting folks accustomed to this model through its free services like Gmail (which Wainewright mentions). But in a company where changes in functionality can lead to new security, compliance or process requirements, I think a little more consideration is required for updates. SaaS providers should be cognizant of this and make it easy for their customers to opt in -- or out.

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This is actually quite an interesting and complicated topic. The real bottom line really the policies of the client organization. How do they accept updates to their computers? What testing policies do they have? I work in healthcare, and there are a lot organizations that use Citrix as a deployment methodology. No changes are allowed at the desktop or C: drive level. In this environment, pushing changes can be pretty hard.

Also given patient safety considerations, this is another twist. Testing and verification is always required before new software can be introduced into the live environment. In some cases even those employees that have regular desktops don't have access to or permissions to change or install software.

Obviously, this creates a real challenge for SaaS providers who want to push updates to the desktop. Not so much a problem in the consumer space, where people have full access to their computers. But in the enterprise there are lots of additional rules.

... The business model of on-premise software vendors is built around denying functionality to users until they can no longer resist paying for an upgrade. The success of this business model depends on spending large amounts on marketing so that users become aware of what they're missing. And of course it forces vendors to stuff the upgrade full of desirable new functions so that users can justify the cost and hassle of making the upgrade.

Yes, some vendors use carrots, but what about sticks? If you don't upgrade to a "current" version, then you'll be unsupported. And what if third party maintenance (3PM) isn't a viable option, for whatever reason?

Vendors need to tread carefully here. I'm a big believer in OS apps making inroads in CRM and ERP over the next few years.

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